Chinese stocks surge beyond 3%, despite the negative background

Major markets in Asia attempted to bounce back on Monday after sharp losses last week, even though Chinese manufacturing data released over the weekend and on Monday came in much worse than expected. Mainland Chinese stocks surged on the day as they attempted to recover from Friday’s steep fall. The Shanghai composite was 3.15% higher at about 2,970.93. The Shenzhen component added 3.65% to 11,381.76 while the Shenzhen composite gained 3.769% to approximately 1,869.65. Hong Kong’s Hang Seng index also advanced 0.75%, as of its final hour of trading.

The moves upward on the mainland came despite a private survey released Monday that showed factory activity in China slumping to a record low in February. The Markit/Caixin manufacturing Purchasing Managers’ Index (PMI) dropped to 40.3, much lower than expectations of a reading of 45.7 in a Reuters poll. The figure had come in at 51.1 in January. The 50-point level in PMI readings separates growth from contraction.

The survey release came on the back of data released by the National Bureau of Statistics on Saturday, which showed the official PMI falling to 35.7 in February ⁠— the lowest level on record, according to Reuters — as compared to a reading of 50.0 in January. Analysts in a Reuters poll had expected the official February PMI to come in at 46.0.

Elsewhere, the Nikkei 225 in Japan recovered from an earlier slip to rise 0.95% on the day to 21,344.08. Shares of Sharp were up 2.2% following reports from Japanese media late last week that the firm is set to start making face masks amid a shortage caused by the coronavirus outbreak. South Korea’s Kospi gained 0.78% to close at 2,002.51. Stocks in Australia, however, continued to decline on Monday, with the S&P/ASX 200 down 0.77% to close at 6,391.50 after tumbling through last week.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.007 after declining from levels around 99.6 last week. The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, traded at 108.31 per dollar after seeing an earlier high of 106.97. The Australian dollar changed hands at $0.653 after dropping from levels above $0.6555 last week. Oil prices surged in the afternoon of Asian trading hours, with international benchmark Brent crude futures up 3.08% to $51.20 per barrel. The U.S. crude futures contract gained 2.73% to $45.98 per barrel.

Chinese stocks surge beyond 3% despite factory activity plunging below expectations, CNBC, Mar 2